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Financial Instruments: Classification and Measurement

Date recorded:

The staff presented a summary of the outreach activities and opinions expressed by constituents on classification and measurement of financial liabilities with the emphasis on the own-credit-risk issue.

The staff clarified that this discussion applies to those financial liabilities that are managed on the contractual cash flow basis but do not fulfil the criteria for classification as basic loans. In addition, the staff noted that this discussion did not relate to the financial liabilities to which the fair value option was applied.

The staff presented four basic approaches to classification and measurement of those financial liabilities:

  • (a) Fair value measurement with separate presentation of changes related to own credit in the OCI
  • (b) An adjusted fair value measurement attribute (frozen credit spread)
  • (c) Bifurcation (either based on criteria in IAS 39 or based on criteria in IFRS 9)
  • (d) Amortised cost measurement with parenthetical presentation of fair value
The staff clarified that views of constituents varied greatly with no view having a majority support. The Board briefly discussed these alternatives.


The Board will hold an educational session on mechanics and potential effects of all the identified approaches in January.

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